Learn how to use Covid-19 financial support, like the Wage Subsidy Payment, to fund your payroll.
Updated: Wednesday 27th September 2021
Auckland is at Alert Level 3. These settings will be reviewed on Monday 4 October.
The rest of New Zealand is at Alert Level 2. These settings will be reviewed on Monday 4 October.
The Covid-19 Wage Subsidy and Covid-19 Resurgence Support Payment are back.
Covid-19 Financial Support
In response to the ever changing Covid-19 situation, the government may announce initiatives to financially support businesses. In the past this has included the Covid-19 Wage Subsidy and the Covid-19 Resurgence Support Payment.
Information about financial support for businesses affected by Covid-19 is being updated regularly. We'd recommend referring to the Work and Income website for the most up to date information and to check if your business meets the eligibility criteria.
Covid-19 Wage Subsidy
Covid-19 Wage Subsidy August/September 2021
The Government has announced that a wage subsidy will be available to businesses impacted by New Zealand moving to COVID-19 Alert Level 4 on 17 August 2021.
It will be available to all New Zealand businesses and self-employed people that meet eligibility criteria.
Applications for a third round of Wage Subsidy are open from Friday 17th September 2021.
The COVID-19 Wage Subsidy will be paid at a flat rate of:
- $600.00 for full-time employees
- $359.00 for part-time employees.
The subsidy will be paid as a lump sum and cover a 2 week period.
Employers must endeavour to pay employees a minimum of 80% of their normal income for the subsidised period, if agreed by the employee/s.
The Covid-19 Wage Subsidy is a tax free payment made to businesses to assist them to pay employee wages. It is not a benefit or direct payment made to employees. Your employee's pay will still be taxed and contributes towards their annual leave entitlements.
Under the scheme, employers must use best endeavors to pay at least 80% of the employee's income. This is considered a change to the employee's employment agreement and all changes must be agreed by the employer and the employee.
In some cases, the subsidy won’t cover full wages. This means the employer is required to top-up the subsidy to meet the minimum 80% wage payment. Check out the four scenarios below to help you calculate the amount you'll need to top up the wage subsidy payment.
Scenario 1: Paying a Full Time Employee 100% of Their Wage With the Subsidy
Jane is a full-time employee and works 40 hours per week. They are normally paid $1000 per week.
The $600 wage subsidy becomes part of Jane's $1000 gross. This means the employer will need to add $400 to reach 100% of Jane's weekly salary.
From Wage Subsidy Lump Sum: $600.00
From Business Funds: $400.00
Combined Total Gross Paid to Employee: $1000.00
Scenario 2: Paying a Full Time Employee 80% of Their Wage With the Subsidy
Jane is a full-time employee and works 40 hours per week. They are normally paid $1000 per week. 80% of Jane's wage will be $800.
The $600 wage subsidy becomes part of Jane's $800 gross. This means the employer will need to add $200 to reach 80% of Jane's weekly salary.
From Wage Subsidy Lump Sum: $600.00
From Business Funds: $200.00
Combined Total Gross Paid to Employee: $800.00
Scenario 3: Paying a Part Time Employee 80% of Their Wages With the Subsidy
John is a part-time employee and works less than 20 hours per week. They are normally paid $500 per week. 80% of John's wage will be $400.
The $359 wage subsidy becomes part of John's $400 gross. This means the employer will need to add $41 to reach 100% of John`s weekly salary.
From Wage Subsidy Lump Sum: $359.00
From Business Funds: $41.00
Combined Total Gross Paid to Employee: $400.00
If you are receiving the COVID-19 Wage Subsidy March 2021, you must try your hardest to pay the employee named in your application at least 80% of their usual wages while you’re receiving the subsidy for them. If that isn't possible, you need to pay at least the subsidy rate (ie, full-time or part-time).
Using the Covid-19 Wage Subsidy in Thankyou Payroll
It is business as usual in your payroll system. Tracking your use of the subsidy is best done in your accounting software.
If your business is the recipient of Covid-19 Wage Subsidy, you continue to process your pays as normal in Thankyou Payroll. Use the Standard Pay type, which you regularly use.
You don't need to transfer the wage subsidy lump sum to Thankyou Payroll. Only transfer the Total Deposit highlighted when processing a pay.
If you are paying your employees 100% of their wages, add their normal hours in their timesheet using the Standard Pay type.
If you are paying your employees 80% of their wages, adjust their hours to reflect 80% of their hours worked. You should distribute the reduced hours evenly across the days worked.
Do not adjust the pay rate - adjust the hours worked.
Example 1: Adjusting Hours for 80% Wage Payment
Jane is a full time employee and normally works 7.5 hours per day, 5 days per week.
Due to the resurgence of Covid-19, Jane and their employer have agreed that they will be paid 80% of their usual wage. Jane's employer adjusts Jane's timesheet to reflect the 80% of their wages to be paid.
Jane's employer will still record the pay as a Standard Pay and deposit the money from their business account to fund the pay.
Example 2: Only Paying The Covid-19 Wage Subsidy
Despite best efforts, Jane's employer can only afford to pay Jane the Covid-19 Wage Subsidy payment. As a full-time employee, Jane qualifies for the entire $600 subsidy payment.
To apply the payment in Thankyou Payroll, Jane's employer will need to split this evenly across the days they normally work in a week.
To do this, Jane's employer takes the $600 subsidy payment and divides it by Jane's normal hourly rate. In this example, Jane's normal hourly rate is $25, so 600 / 25 = 24.
Jane's employer will then divide this total by the number of days Jane normally works in a week. Jane normally works 5 days per week, so Jane's employer would then calculate 24 / 5 = 4.8
This new total is then added to each day in Thankyou Payroll. Therefore, Jane's timesheet would show 4.8 hours worked each day. This results in Jane being paid the full subsidy.
Wage Subsidy: $600.00
Jane's Normal Hourly Rate: $25.00
Days Normally Worked:. 5
Calculation: 600 / 25 = 24 / 5 = 4.8
Reduced Hours To Add to Timesheet: 4.8
Covid-19 Resurgence Support Payment
Covid-19 Resurgence Support Payment August 2021
Applications for the alert level increase announced on 17 August opened at 8am on 24 August 2021.
A second round of resurgence support payments was announced on 10 September 2021. Applications open from 17 September and will be available until one month after a nation-wide return to level 1.
A business or organisation must have experienced at least a 30% drop in revenue or a 30% decline in capital-raising ability over a 7-day period, due to the increased COVID-19 alert level.
Eligible businesses and organisations can apply to receive the lesser of:
- $1,500 plus $400 per full-time equivalent (FTE) employee, up to a maximum of 50 FTEs
- four times (4x) the actual revenue decline experienced by the applicant.
Check how much you could be eligible to receive on Inland Revenue's website.
The Resurgence Support Payment (RSP) is a payment to help support viable and ongoing businesses or organisations due to a COVID-19 alert level increase to level 2 or higher. If your business or organisation is facing a reduction in revenue due to an alert level increase, you may be eligible.
To learn more about the Resurgence Support Payment and to check if you meet the eligibility criteria, check out the Inland Revenue Website.
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